Short Term Trading

Short Term Trading

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Earlier this year I wrote an article on investment ideas for the year:

I picked some stocks to hold for an investment period of a year. I have been formally trained to approach investing as long term activity. The rational person in me understands that investing is for the long term. My picks are doing well four months into the investment period:

There is another part of my brain that wants to invest for a short period.  The concept of Day trading is extremely sexy. It is almost the same drive that fuels gamblers.  I have done this in the past. I have made a large sum of money, and I have lost large sum of money doing day trading and short term trading.

I want to try again.  I am hoping to find a way to do this in a sensible manager.

Here are some things I am going to put in place to have mental discipline:

  1. I am only going to invest a sum that I can afford to lose.
  2. My investment time period will be between a day to a month.
  3. I will put in an automatic exit value to avoid losing unrealized gains due to greed.
  4. I will also cut my loses if my investment period is up and I am at a loss. I always have trouble selling at a loss. This is something that I have had to come to terms with. You will always have winning and losing trades. The discipline comes into play to minimize loses and take profits.
  5. The last item – I will write a blog post on why I am doing a specific short term trade before I actually place the trade. This is to force me to make my investment based on research instead of gut feeling!

I will share my progress and my thoughts as I go through this process.

Happy Trading!

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